Guess Q3 profit dips 4% as tax rate increases

By Katherine Boccaccio

Los Angeles -- Guess Inc. said Wednesday that profit for the quarter ended Oct. 29 fell 4% as the clothing company's tax rate increased. The chain reported net income of $66.3 million, compared with $69.1 million in the year-ago period. The company's effective tax rate rose to 32.3% during the quarter from 29.1% a year earlier. As a result, the incomes taxes Guess paid rose 5% to $31.9 million.

Revenue rose 5% to $642.8 million from $613.9 million, missing Wall Street’s expected $657.2 million in revenue. Same-store sales in the United States fell 3.5%.

"We are pleased to deliver third quarter earnings consistent with our expectations, even as economic pressures have intensified and are affecting consumer confidence in many of our markets, particularly in Europe,” said Paul Marciano, CEO. “Our efforts to elevate our brand in North America are yielding significant improvements in profitability. We enjoy momentum in Asia and the newer markets in Europe where our brand is well known but where our business is still under-penetrated. And we are focusing on sound execution, managing our inventories, expenses and capital prudently."

The company is projecting fourth quarter profit and revenue that are short of Wall Street estimates.